A Second Look at Delta Financial

I mentioned in the last article that I needed to take a second look at Delta Financial. After all, 5.1% of their loans were 90 days or more past due, while the allowance for loan losses was only .88%. From previous research, I had learned that in Delta recieved at best 50% of the principal balance back on foreclosed loans, which makes the current provision for losses seem low. So, I took a look at the delinquency history to put the situation in perspective.

90+ day delinquencies, from 1994 to present.

2.1%, 1.44, .99, .96, 1.62, 1.55, 2.11, ?, ?, ?, .85, 2.65, 5.1
Note: The ?'s are for data that is unavailable.

30+ day delinquencies, from 1994 to present.

11.44, 10.5, 8.4, 7.4, 8.5, 9.6, 12.6, ?, ?, ?, ?, ?, 10.5

We are able to see two important facts. One, the 90+ days delinquency rate today is double anything that has been seen over the last 12 years. Second, the 30+ delinquency numbers are in line with historic standards. I don't know exactly what to make of these, but I do find the former very disturbing. This is one reason I've kept Delta at such a small position. (<4%)>

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Edit: As I'm looking through this on 8/12/07, I realized that a paragraph i wrote after this is not here, probably due to some error on my part. The paragraph describes my decision to sell, which is subsequently confirmed in the next post on the same date updating Blog performance. Regardless, im disappointed this final decision to sell had not shown up on this post, but this has been why Delta Financial has not continued to be shown on my Current Holdings list for this time. I apologize for any misunderstanding.